JC Penney surged after posting a second-quarter loss that was smaller than analysts estimated and saying the back-to-school shopping season was off to a "strong start".

The net loss in the quarter to the end of August 1st narrowed to $138 million, or 45 cent a share, the Texas-based company has said. Analysts had projected a loss of 50 cent a share.

Sales rose 2.7 per cent to $2.88 billion, topping projections of $2.86 billion. The results are a boon for new chief executive Marvin Ellison as he works to continue the turnaround started by predecessor Mike Ullman.

Where Mr Ullman stabilised JC Penney, Mr Ellison will now have to prove the company can become consistently profitable.

The shares rose as much as 9 per cent to $8.80 in New York for the biggest intraday gain since January.